Masala Bonds are instruments of debts that are ordinally used by corporates to raise money in INR from foreign capitalists. They are rupee denominated financial instruments issued by Indian companies to raise capital from foreign investors in Indian currency. These bonds are particularly destined for the overseas investors who are interested to participate in Indian assets. International Finance Corporation (IFC), a global development and investment institution, launched the first Masala bonds at London Stock Exchange (LSE) in year 2014. IFC issued 7 tranches of offshore rupee-denominated bonds, settled in US Dollars and pinned to the rupee foreign exchange rate, for maturities ranging from 3 to 7 years. The main objective of the study is to understand what Masala bonds are and how the issuance of these bonds by IFC have affected the Forex market and exchange rates in India. The research also emphasis only on the period when Masala Bonds were issued solely by IFC as the study aims to find the competitiveness of IFC masala bonds on Indian foreign exchange rates.

Keywords: Masala Bonds, International Finance Corporation, Exchange Rate, Forex Market, Foreign Exchange Fluctuation, Indian Capital Market.